StubHub Hit with Class Action After Pulling ‘FanProtect’ Cash Refund Promise for Coronavirus-Related Cancellations [UPDATE]

A Wisconsin consumer alleges in a proposed class action lawsuit that StubHub has unlawfully pulled back on its longstanding “FanProtect” guarantee by refusing to issue cash refunds for tickets to events canceled due to the coronavirus pandemic.

According to the 19-page lawsuit, StubHub looks to shift onto consumers its losses stemming from “the entirely foreseeable scenario” that worldwide issues could cause the simultaneous cancellation of thousands of public events. The suit argues that the liabilities StubHub created for itself with its “FanProtect” cash refund guarantee, in the face of both coronavirus-related mass cancellations and the secondary ticket market’s choice to pay ticket sellers before an event has even occurred, are of the company’s own device and should in no way fall on consumers’ shoulders.

Though defendants StubHub, Inc. and Last Minute Transactions, Inc. have offered customers vouchers worth 120 percent of their total ticket order for canceled events, the lawsuit—alleging breach of contract, false advertising, and violations of California consumer protection laws—claims the companies’ “abrupt and illegal about-face” has cheated tens of thousands of customers out of money to which they’re legally entitled.

A “hallmark” of StubHub’s business

As the lawsuit describes it, StubHub for years used its “FanProtect” guarantee as a tool to get consumers to feel comfortable with paying “substantial prices, often beyond face-value” for event tickets on the company’s secondary market. Built into the ticket seller’s user agreements and marketed heavily online and elsewhere, StubHub’s “FanProtect” promise has been what the case calls a “major component” of the company’s overall value. In fact, the suit says, Stubhub’s vice president and general counsel testified as much before Congress in February 2020, saying that “StubHub’s FanProtect guarantee is the hallmark of our business and why we have earned the trust of fans around the globe.”

According to the complaint, such was the case until the coronavirus pandemic became the new reality. In early March as the pandemic spread, StubHub allegedly sent to users an email titled “Coronavirus Update: We have your back.” in which the ticket seller “insisted that refunds were still available for cancelled events” while offering the option of a coupon worth 120 percent of a user’s original order for an event within the next year.

On March 25, however, StubHub allegedly—and quietly—changed its tune, updating the terms of its “FanProtect” guarantee online to stipulate that “if the event is canceled and not rescheduled, you will get a refund or credit for use on a future purchase, as determined in StubHub’s sole discretion (unless a refund is required by law).” Subsequent communications from StubHub made clear, without explanation, that customers would receive not refunds for coronavirus-related cancellations but only a coupon worth 120 percent of an original order’s value valid for one year, the case adds.

For your “convenience”

According to the lawsuit, StubHub president Sukhinder Singh Cassidy “had the temerity” to claim in an email that “the theft of customers’ money,” i.e. the replacement of full cash refunds for vouchers valid for one year to events that may never happen, was done for customers’ convenience. Further, the case alleges that while StubHub has refused to remit cash refunds to customers, the company has also failed to pass along any “savings” it may have pulled in onto ticket sellers, who according to the lawsuit “have in many or all instances been backbilled for the canceled events.”

StubHub finally addressed the formal rescinding of its “FanProtect” guarantee in a March 30 email from Cassidy in which the company, rather than accept responsibility, continued to tout the policy change as in the interest of customers, the lawsuit says. In the email, the company also admitted that the impact of the coronavirus pandemic made it impossible to sustain its ticket buyer and seller refund practices in the near-term while still touting its voucher offerings as “clear and fan-first,” according to the suit.

A “self-imposed liquidity crisis”

The lawsuit goes on to argue that despite its recent acquisition by rival Viagogo for more than $4 billion, StubHub, rather than obtain a level of liquidity adequate enough to weather the coronavirus storm, has instead sought to pass its losses onto consumers. Speaking to the broader business model of companies like StubHub, Vivid Seats and Gametime, the case places the blame for StubHub’s inability to provide cash refunds in the face of mass event cancellations on its inherent shortage of operational cashflow.

Instead of instituting responsible financial transaction policies, Defendants made it their practice to pay ticket sellers before the event had occurred, exposing themselves to the possibility that they would be left holding the bag (or have to ignore their own guarantee and cheat their customers) if an event was cancelled and they could not promptly collect from sellers.”

Despite Cassidy’s representations, cash refunds represented a “key component” of the contractual agreement between StubHub and ticket buyers that goes beyond mere convenience, the case claims. Rather than a simple courtesy, cash refunds “were and remain contractual obligations” between StubHub and customers such as the plaintiff, who the suit says bought two NHL tickets and received no refund from StubHub once the league suspended the remainder of its season.

Who’s covered by this lawsuit?

The case proposes to cover anyone in the U.S. and U.S. territories who opened a StubHub account before October 1, 2018 and used StubHub to buy tickets to any event that was canceled or is canceled at any point from March 25, 2020 until the date on which notice is sent out to potential class members and has not been issued a refund.

How can I get in on this class action?

For most lawsuits, there’s nothing you need to do in order to be a part of or “join” a class action lawsuit. At this stage, those who may be covered by the lawsuit can only sit tight and wait for the case to work its way a little farther along in the legal system.

As always, we recommend consumers do their best to stay informed, in particular given the swell in coronavirus-related class action lawsuits like this one. Sign up for ClassAction.org’s newsletter here.

The suit can be found below.